ENGLEWOOD, Colo., Oct. 31 /PRNewswire/ -- Echo Bay Mines Ltd.
(AMEX and TSE: ECO) today reported a net loss of $12.4 million ($0.09 per
share) in the third quarter of 1996 before a previously announced special
provision of $30.0 million ($0.22 per share) for waste rock stabilization at
the McCoy/Cove mine, which brought the total quarterly loss to $42.4 million
($0.31 per share). A year ago, Echo Bay had a third quarter net loss of
$8.7 million ($0.08 per share).
The average number of common shares outstanding during the quarter rose to
137.6 million from 113.9 million a year ago.
The losses in both quarters reflect the continuing high level of
exploration and development activity in the company's international search for
new gold reserves and production. Echo Bay expensed $17.1 million in the
third quarter of this year and $18.8 million a year ago to advance a number of
exploration and development projects.
Gold production rose 6% to 218,043 ounces from the same quarter last year,
reflecting increased tonnage of ore processed at both McCoy/Cove and Round
Mountain, partly offsetting lower ore grades processed. Cash operating costs
increased to $243 per ounce of gold produced from $215 in the previous year,
reflecting the lower grades. Silver production was 2.1 million ounces, down
from the previous year of 3.4 million, but up from the second quarter. Silver
grades during the period were 45% lower than the same period the previous
year.
The full-year gold production target remains unchanged and is anticipated
to be 725,000-750,000 ounces at a cash operating cost of $245-255 per ounce.
Full-year silver production is now anticipated to be approximately seven
million ounces (see "1996 Targets" on page 10).
Third quarter revenues were $94.9 million this year, compared with
$93.5 million a year ago. The average price received per ounce of gold sold
during the quarter by Echo Bay was $390, compared with $387 in 1995.
The increase in the number of shares outstanding to 139.4 million at
quarter's end reflects the July issuance of 8.8 million shares to increase
Echo Bay's interest in Santa Elina Gold Corporation to 50% from 7%. The
increase over the third quarter of 1995 also includes 16.9 million shares
issued in late 1995 in connection with the conversion of convertible preferred
stock.
Provision for Waste Rock Stabilization at McCoy/Cove
In August, Echo Bay announced that it would establish a one-time
$30.0 million provision for the estimated costs of removing up to 30 million
tons of waste rock from an unstable portion of the Cove pit wall at the
McCoy/Cove mine in Nevada. The unstable pit wall has had no effect on
production or reserves, and no future impact is anticipated. Existing ore
stockpiles of 4.5 million tons, together with ore to be mined from other areas
of the pit, will provide production sources until the stabilization of the pit
wall is complete. The majority of the work is expected to be undertaken in
1997 and 1998 following completion of a detailed stabilization plan,
anticipated in early 1997.
Exploration and Development Properties
Echo Bay is advancing a number of projects from exploration through
feasibility and development to construction. Detailed feasibility studies are
well under way at Aquarius in Canada, Paredones Amarillos in Mexico, A-J in
Alaska and Chapada in Brazil. Three initial feasibility studies, those studies
that determine whether or not to advance the project for further development,
are also moving forward at Kingking in the Philippines and Fazenda Nova and
Sao Francisco in Brazil.
During the quarter, in connection with activities advancing its
exploration and development prospects, Echo Bay charged $17.1 million against
current earnings and capitalized another $19.0 million of acquisition and
development costs.
Echo Bay's exploration and development properties represent opportunities
for future growth. These opportunities come to the company through
exploration, acquisition and, more importantly, as the result of the company's
program of strategic alliances with smaller, entrepreneurial exploration
companies. These alliances have allowed Echo Bay to expand its search for
gold from North America throughout the world. Highlights of these programs
are outlined below:
-- At the 100% owned Aquarius gold property in the Timmins mining district
of Ontario, Canada, the 1996 drill program of 43,500 meters (138,000 feet) was
completed in August. Extensive hydrological studies and other process
optimizations are nearing completion. The detailed feasibility study is
scheduled to be completed by year-end 1996. A construction decision could be
made in early 1997 and production could begin as early as 1999.
-- At the 60% owned Paredones Amarillos gold project in Baja California
Sur, Mexico, the 1996 in-fill drilling program was completed early in the
third quarter with a total of 18,000 meters (59,000 feet) drilled. These
drill results are being incorporated into the global resource evaluation. An
increase is anticipated in the number of minable ounces of gold due to an
increase in the tons of ore outlined by the drilling program. Other work is
being completed, including water source studies, in support of a detailed
feasibility study anticipated for completion by year-end 1996. If a positive
construction decision is made in early 1997, production could start as early
as the fourth quarter of 1998.
-- Seven drill rigs are at work at the 41.5% owned Chapada copper-gold
deposit in Brazil. The drill program was hampered early in the year by the
unavailability of skilled crews and problems getting equipment into the
country. Issues such as these continue to slow the program. Among the
concerns being addressed in a detailed feasibility study, now scheduled for
completion in the second quarter of 1997, is the high cost of transporting
concentrates across most of Brazil to a deepwater port.
-- At the 100% owned Alaska-Juneau gold project in Alaska, a revised
feasibility study is being prepared based on the significant additional
information from a two-year underground, in-fill drilling program completed in
1995. Geological assessment of the drilling data was completed in the third
quarter of 1996. Indications are that mining zones will be narrower than
previously estimated leading to a reduced scale of operations and more costly
mining methods.
The revised feasibility study will incorporate a new mine plan and address
the submarine tailings disposal method currently under consideration by the
U.S. Environmental Protection Agency. The extent to which narrower mining
widths, a smaller operation and required environmental changes would adversely
affect the economics of the project is not yet clear. The revised feasibility
study is expected to be completed at year's end.
-- Echo Bay's initial feasibility study on the optioned Kingking copper-
gold development property in the Philippines is currently expected to be
completed by the second quarter of 1997. The slow start to the exploration
drilling program has now been corrected and two more drills have been added,
bringing the total to 10. These rigs are working towards completing 45,000
meters (150,000 feet) of drilling. Drilling to date, much of it focused on
the eastern portion of the mineralized area outlined by Benguet Corporation
(NYSE: BE), the property's current owner, indicates significantly more tons
are being found at similar or slightly lower grades than those outlined by
Benguet's earlier work. Additional drilling is continuing to the west in areas
where there were preliminary indications of higher gold grades and lower
copper grades. Mapping and sampling is under way at two other targets,
Binutaan and Diat.
-- Initial feasibility studies at two exploration prospects in Brazil, Sao
Francisco and Fazenda Nova, are currently expected to be completed in the
third quarter of 1997. The exploration drilling program was delayed due to
difficulties in getting drill rigs and other equipment into the country.
Currently, four drill rigs are at work at Sao Francisco and five at Fazenda
Nova.
Work is also being conducted on a hydropower plant proposed for the
Guapore River as a potential source of low-cost power for several of Santa
Elina's gold projects in Brazil.
-- Six targets have been identified at the Kilgore gold exploration
property, located in Idaho. This intermediate exploration project is believed
to contain a large, volcanic-hosted, altered and mineralized gold system.
Drilling has identified numerous mineralized structures, and the company is
working to narrow the area of focus.
-- At the Huaco Cucho gold exploration property in Peru and the adjacent
Patacancha property, two drill rigs are currently in operation on one of five
large targets identified by early mapping and sampling work. Ten holes of a
24-hole program have been completed, with a number of them intercepting gold
mineralization. Echo Bay is earning a 50% interest in both of these
properties.
-- Twenty-one holes have been drilled at the Dolores gold exploration
property, located in northwestern Mexico, with assay results having been
received from the first 11. Ten of these assays showed significant gold
mineralization. A second phase of drilling is likely to begin in November.
Echo Bay has an option to purchase 60% of this project.
McCoy/Cove, Nevada: More Tons Treated at a Lower Grade
At McCoy/Cove, Echo Bay's largest producer, 85,754 ounces of gold were
produced during the quarter, down 7% from 92,002 ounces in 1995. In
compensation for lower ore grades at deeper levels of the mine, significantly
more tons of ore are being processed both in the mill and on the heap leach
pads. The average grade milled during the quarter was 42% lower than in 1995
(0.080 versus 0.137 ounces per ton), and the average grade heap leached was 6%
lower (0.015 versus 0.016 ounces per ton).
During the quarter, 41% more tons were milled (10,008 versus 7,117 tons
per day) compared to the third quarter of 1995. The increase in the tons
milled resulted from the first full quarter utilizing the increased capacity
afforded by the mill expansion, which was completed in April. The mill
expansion not only provides additional capacity but also improves recoveries
through additional retention time.
The amount of ore placed under heap leach doubled, to 22,393 from 11,070
tons per day in 1995, with the additional volume coming from run-of-mine
(uncrushed) ore placed under leach. Heap leaching accounted for 23% of the
gold and 6% of the silver produced during the quarter.
Silver production was 2,092,987 ounces, compared with 3,404,998 ounces in
the same quarter of the previous year. Silver grades were also down 47% (3.30
versus 6.28 ounces per ton).
Cash operating costs were $239 per ounce of gold produced, compared with
$200 per ounce a year ago, reflecting the lower gold and silver grades.
Due to increased capacity, the full-year gold production at McCoy/Cove is
currently expected to be only 15-20% less than in 1995 (see "1996 Targets" on
page 10).
Round Mountain, Nevada: Increased Loading, Increased Production
At the 50%-owned Round Mountain mine in Nevada, Echo Bay's portion of gold
production increased 44% to 59,415 ounces from 41,236 ounces in 1995. This
increase came as a result of the accelerated loading of ore on both the
dedicated and reusable pads. In the current quarter, loading continued to be
high with a 17% increase on the reusable pad and a 45% increase on the
dedicated pad over the same period in 1995.
During the quarter, there was only a slight drop in the grade of the tons
placed on the reusable pad (0.032 versus 0.034 ounces per ton), with a 25%
drop in the grade of the tons to the dedicated pad (0.010 opt versus 0.013
opt). Ore placed on the dedicated pad included that previously leached on the
reusable pad as well as low-grade stockpiles.
Cash operating costs were $228 per ounce, compared with $194 per ounce in
the same period in 1995. Costs rose because of the lower grade of ore placed
under leach and the higher cost of mining deeper in the pit, which was only
partially offset by higher volume.
Round Mountain has increased its full-year production target to 10-15%
more gold than in 1995 (see "1996 Targets" on page 10).
Construction of a mill at Round Mountain continues on track. The 8,000-
ton/day mill is slated to begin operations in late 1997 and will process large
quantities of nonoxidized ore. More nonoxidized ore is being added to the
stockpile each quarter in preparation for mill start-up.
Lupin, Northwest Territories: Ground Conditions Slow Mining
Production at Lupin, located in the Northwest Territories, was 41,295
ounces, down 9% from 45,133 ounces in 1995. Mining at depth in the Centre
Zone and East Zone of the ore body was slowed by the necessity of more ground
support, resulting in reduced tonnage sent_
to the mill from year-ago levels.
The slower mining rate has resulted in a reduction of Lupin's full-year
production target to the same level as last year (see "1996 Targets" on page
10).
Ore grades are also lower at depth. The average grade milled in the third
quarter was 0.231 ounces per ton this year and 0.267 a year ago.
Cash operating costs increased to $310 per ounce from $280 a year ago,
reflecting the reduced mining rate and fewer ounces produced.
To facilitate the mining of the Ulu deposit as satellite feed for Lupin,
Echo Bay signed an agreement with the Kitikmeot Inuit Association to provide
education, employment, job training and business opportunities for the area
Inuit communities. The portal has been collared at Ulu, and a ramp is being
driven into the mineralization. Ore-grade material is expected to be reached
early in 1997 and trucked to Lupin beginning in 1998.
Kettle River, Washington: Continued Good Performance
At the Kettle River mine in Washington State, gold production increased
18% to 31,579 ounces from 26,748 ounces a year ago. Cash operating costs were
$201, down from $217 per ounce. This improvement resulted from treating ores
with 19% higher grades, 0.244 compared with 0.205 ounces per ton.
At the end of the quarter, the mill increased operations from five to
seven days a week, maximizing mill capacity at 2,000 tons per day. The
increased production capacity will offset the lower ore grades planned for
processing later this year and into 1997.
Underground development of the K-2 deposit is being completed. The
underground work indicates that ore grades and widths are similar to those
indicated by earlier exploration drilling from the surface. Possible
extensions of the deposit still need to be investigated.
The full-year 1996 production target for Kettle River remains
approximately 20% more gold than in 1995 (see "1996 Targets" on page 10).
Gold Loan Restructuring
In August, the company adjusted its gold loan repayment schedule by
refinancing a gold loan, originally established in 1992 and payable in 1996.
The year-end balloon payment will now be repaid over five years. At September
30, 1996, the loan balance was 43,750 ounces of gold valued at $387.50 per
ounce including deferred amounts. As part of the same agreement, the company
borrowed an additional $34.7 million in currency which will also be repaid
over five years. The refinancing is to fund capital expenditures for the new
Round Mountain mill and the development of Lupin's satellite mine, Ulu.
Echo Bay is a major gold producer with mines in Canada and the United
States. The company has expanded its search for new gold reserves and
production worldwide. The company's long-term goal is to double annual gold
production to 1.5 million ounces of gold at a cash production cost well below
current levels, and to increase gold reserves to more than 20 million ounces.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: The statements herein that are not historical facts are forward-
looking statements involving risks and uncertainties that could cause actual
results to vary materially from targeted results. These include but are not
limited to differences in ore grades and tons mined from those expected,
changes in project parameters as plans continue to be refined, changes in
mining and milling rates from currently planned rates, the results of current
exploration activities and new exploration opportunities, and the conclusions
of feasibility studies currently under way. Please refer to a discussion of
these and other factors in the company's 10-K, 10-Q and other Securities and
Exchange Commission filings.
ECHO BAY MINES
10/30/96 Revision
1996 Targets Update
Current Original
1996 1996 1995
Production and Costs: Target Target Actual
Gold production On target 725,000 - 754,762 oz.
750,000 oz.
Change from 1995
production levels:
McCoy/Cove 15 - 20% less 20-25% less 310,016 oz.
Round Mountain 10 - 15% more 5-10% more 172,217 oz.
Lupin Same as 1995 10% more 172,110 oz.
Kettle River On target 20% more 100,419 oz.
Silver production Approximately 7.5-8.5 11.9
7 million oz million oz. million oz.
Cash operating costs On target $245-$255/oz.
$229/oz.
Current Original
1996 1996 1995
Significant Expenses: Target Target Actual
Depreciation and amortization On target $100/oz. $97/oz.
Exploration expense(1)(millions) $48 $43 $47
Development property
expense(2)(millions)
Alaska-Juneau(3) $19 $15 $20
Kensington(4) -- -- 3
$19 $15 $23
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: The above forward-looking statements involve risks and uncertainties
that could cause actual results to vary materially from targeted results.
These include but are not limited to differences in ore grades and tons mined
from those expected, changes in project parameters as plans continue to be
refined, changes in mining and milling rates from currently planned rates, the
results of current exploration activities and new exploration opportunities,
and the conclusions of feasibility studies currently under way. Please refer
to a discussion of these and other factors in the company's 10-K, 10-Q and
other Securities and Exchange Commission filings.
(1) Including noncash portions of $4 million in 1996 and $3 million in
1995. Included is Echo Bay's share of the loss reported by Etruscan
Enterprises Ltd., reflecting the equity method of accounting for Echo Bay's
24.3% investment in Etruscan.
(2) Including noncash portions of $5 million in 1996 and $7 million in
1995.
(3) The company current 1996 target has been increased by $4 million from
earlier projections to reflect anticipated additional submarine tailings
disposal permitting costs.
(4) Kensington was sold in June 1995.
ECHO BAY MINES
Highlights
Three months Nine months
ended Sept. 30 ended Sept. 30
U.S. dollars 1996 1995 1996 1995
Financial Data
Revenue (millions) $94.9 $93.5 $257.8 $268.3
Net loss (millions):
Before special McCoy/Cove provision(1) $(12.4) $(8.7) $(43.2) $(33.3)
After special McCoy/Cove provision (1) $(42.4) $(8.7) $(73.2) $(33.3)
Exploration expense (millions) $13.1 $13.8 $35.7 $31.0
Development properties expense (million) $4.0 $5.0 $13.5 $17.5
Cash flow before exploration and
development properties expenses
(millions(2) $27.2 $34.6 $69.1 $90.5
Cash flow after exploration and
development properties expenses
(millions)(2) $ 12.6 $ 18.4 $ 26.8 $ 48.7
Gold ounces sold (3) 217,686 188,874 589,759 557,144
Silver ounces sold (thousand) (3) 1,889.2 3,619.4 4,744.4 9,654.4
Average price realized
Per ounce of gold sold $ 390 $ 387 $ 393 $ 388
Per ounce of silver sold $ 5.29 $ 5.62 $ 5.53 $ 5.40
Cash operating costs
Per ounce of gold produced $ 243 $ 215 $ 247 $ 229
Per ounce of silver produced $ 3.14 $ 2.78 $ 3.54 $ 2.91
% of revenue from gold 89% 78% 90% 81%
% of revenue from silver 11% 22% 10% 19%
Production and Reserves
Production (thousands of ounces)(3)
Gold 218.0 205.1 584.9 571.1
Silver 2,093.0 3,405.0 4,917.2 9,465.1
Reserves (thousands of ounces)(4)
Gold 10,983 11,300
Silver 62,913 82,724
Per Share Data
Net loss:
Before special McCoy/Cove
provision (1) $(0.09) $(0.08) $(0.33) $(0.29)
After special McCoy/Cove
provision(1) $(0.31) $(0.08) $(0.55) $(0.29)
Cash flow (2) $ 0.09 $ 0.16 $ 0.20 $ 0.43
Gold production (milliounces) (5) 1.6 1.8 4.4 5.0
Gold reserves (milliounces) (4,5) 84.6 100.3
Shares outstanding (millions)
Weighted average 137.6 113.9 132.8 113.1
Period end 139.4 122.0 139.4 122.0
(1) Provision for waste rock stabilization in Cove pit wall.
(2) Working capital provided by operations.
(3) Amounts sold differ from amounts produced due to inventory changes.
(4) Proven and probable reserves at the beginning of the year.
(5) 1 milliounce = 0.001 ounce.
ECHO BAY MINES
Production and Costs
Three months Nine months
ended Sept. 30 ended Sept. 30
1996 1995 1996 1995
Gold Production (ounces)
McCoy/Cove 85,754 92,002 204,218 251,743
Round Mountain (50%) 59,415 41,236 156,748 127,453
Lupin 41,295 45,133 129,853 118,017
Kettle River 31,579 26,748 94,071 73,839
Total gold 218,043 205,119 584,890 571,052
Silver Production
(thousands of ounces)
McCoy/Cove 2,093.0 3,405.0 4,917.2 9,465.1
Total silver 2,093.0 3,405.0 4,917.2 9,465.1
Cash Operating Costs (1)
(U.S. dollars per ounce
of gold produced)
McCoy/Cove (2) $239 $200 $263 $215
Round Mountain 228 194 215 191
Lupin 310 280 287 305
Kettle River 201 217 196 243
Company average $243 $215 $247 $229
Consolidated Costs (1)
(U.S. dollars per ounce
of gold produced)
Cash operating costs $243 $215 $247 $229
Royalties 12 9 11 9
Production taxes 1 5 3 6
Total cash costs 256 229 261 244
Depreciation 58 54 65 59
Amortization 34 37 33 37
Reclamation 8 6 7 5
Total production costs 356 326 366 345
General and administrative 12 12 15 12
Exploration expense 53 55 55 44
Development properties expense 16 20 21 25
Interest expense (income) 5 (5) 2 6
Other expense (income) 4 (2) 3 2
Income taxes 1 4 1 1
Breakeven (3) $447 $410 $463 $423
(1) Effective January 1, 1996, Echo Bay adopted the new Gold Production
Cost Standard developed by the Gold Institute as a means of facilitating
meaningful comparisons among companies through uniform presentation of all
cost data industry-wide. "Cash production costs" reported by Echo Bay in
prior periods have been converted into "cash operating costs" in accordance
with the new standard. In Echo Bay's case, there is no material difference
between the two.
(2) In 1996, cash operating costs per ounce of silver produced at
McCoy/Cove were $3.14 and $3.54 for the three-month and nine-month periods
respectively, based on average gold-to-silver price ratios of 76.0:1 and
74.2:1 respectively. In 1995, cash operating costs per ounce of silver
produced at McCoy/Cove were $2.78 and $2.91 for the three-month and nine-month
periods respectively, based on average respective price ratios of 71.9:1 and
74.0:1.
(3) Before provision for McCoy/Cove pit wall stabilization and preferred
stock dividends. The entire issue of convertible preferred stock was
converted or redeemed in late 1995.
ECHO BAY MINES
Consolidated Earnings Statement
(Unaudited)
Three months Nine months
Thousands of U.S. dollars, ended Sept. 30 ended Sept. 30
except for per share data 1996 1995 1996 1995
Revenue $94,936 $93,497 $257,772 $268,300
Expenses:(1)
Operating costs 57,940 51,840 160,464 157,649
Royalties 3,021 2,384 7,253 6,620
Production taxes 253 1,359 1,749 4,230
Depreciation 13,837 13,031 42,232 41,056
Amortization 8,127 8,720 21,748 24,909
Reclamation 1,985 1,377 4,568 3,797
General and administrative 2,850 2,950 9,732 8,567
Exploration expense 13,076 13,796 35,668 31,040
Development properties expense 4,031 4,964 13,460 17,494
Other (income) expense 868 (382) 1,688 1,733
Interest (income) expense 1,237 (1,252) 1,561 (4,171)
Provision for McCoy/Cove pit wall
stabilization 30,000 -- 30,000 --
137,225 98,787 330,123 292,924
Loss before taxes (42,289) (5,290) (72,351) (24,624)
Income tax expense (recovery):
Current 126 800 767 1,641
Deferred -- -- 56 (950)
126 800 823 691
After-tax loss before
preferred stock dividends(2) (42,415) (6,090) (73,174) (25,315)
Preferred stock dividends
of a subsidiary -- 2,599 -- 8,010
Net loss $(42,415)$(8,689)$(73,174)$(33,325)
Loss per share $ (0.31)$ (0.08)$ (0.55)$ (0.29)
Weighted average number of
shares outstanding (millions) 137.6 113.9 132.8 113.1
(1) Effective January 1, 1996, Echo Bay adopted the new Gold Production
Cost Standard developed by the Gold Institute as a means of facilitating
meaningful comparisons among companies through uniform presentation of all
cost data industry-wide. Certain accounts in this document have been
reclassified to reflect the change. The reclassification has no effect on
earnings (loss).
(2) The entire issue of convertible preferred stock of a subsidiary was
converted or redeemed in late 1995.
ECHO BAY MINES
Consolidated Balance Sheet
(Unaudited)
Sept. 30 Dec. 31, Sept. 30
Thousands of U.S. dollars 1996 1995 1995
Assets
Current assets:
Cash and cash equivalents $145,039 $185,843 $188,586
Short-term investments -- -- 8,178
Interest and accounts receivable 13,213 14,749 5,546
Inventories 41,007 34,173 42,828
Prepaid expenses and other assets 7,079 5,353 6,181
206,338 240,118 251,319
Plant and equipment 250,620 255,868 262,736
Mining properties 441,385 318,219 274,334
Long-term investments and other assets 41,741 56,956 57,507
$940,084 $871,161 $845,896
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and
accrued liabilities $ 54,867 $ 61,781 $ 42,182
Income and mining taxes payable 4,228 2,547 4,293
Current portion of gold and
other financings (1) 136,985 41,135 10,829
Current portion of deferred income 15,576 25,053 --
211,656 130,516 57,304
Long-term gold and other financings 46,580 111,679 116,318
Long-term deferred income 11,561 -- 27,290
Other long-term obligations 60,382 32,018 24,186
Deferred income taxes 8,166 8,096 7,681
Preferred stock of subsidiary -- -- 62,161
Common shareholders' equity:
Common shares 709,510 618,965 556,959
Retained earnings (deficit) (93,178) (15,109) 6,469
Foreign currency translation (14,593) (15,004) (12,472)
601,739 588,852 550,956
$940,084 $871,161 $845,896
(1) Total gold and other financings were $183.6 million at September 30,
1996 (including current portion of $137.0 million), up $56.5 million from
$127.1 million at September 30, 1995 (including current portion of
$10.8 million).
ECHO BAY MINES
Consolidated Statement of Cash Flow
(Unaudited)
Three months Nine months
ended Sept. 30 ended Sept. 30
Thousands of U.S. dollars 1996 1995 1996 1995
Cash Provided by (Used in):
Operating Activities
Net loss $(42,415) $(8,689) $(73,174) $(33,325)
Add items not affecting working capital:
Depreciation and amortization 21,964 21,751 63,980 65,965
Dividends on preferred stock
of subsidiary
net of interest rate swap income -- 2,599 -- 8,010
Development properties expense 1,279 1,279 3,837 5,412
Deferred income taxes -- -- 56 (950)
Environmental expenses at
non-producing properties -- -- -- 5,899
Equity in loss of affiliate 1,078 -- 2,632 --
Gain on sale of assets (65) 230 (2,383) (5,604)
Provision for McCoy/Cove pit
wall stabilization 30,000 -- 30,000 --
Other 796 1,712 1,878 3,280
Working capital provided
by operations 12,637 18,422 26,826 48,687
Decrease (increase) in cash invested in
working capital related to operations:
Interest and accounts receivable 4,880 2,670 1,612 326
Inventories 1,664 (1,614) (5,096) (9,807)
Prepaid expenses and other assets (1,052) (1,735) (968) (988)
Accounts payable and
other liabilities (5,682) 857 (7,784) (4,204)
Income and mining taxes payable (57) (800) 646 2,445
12,390 17,800 15,236 36,459
Financing Activities
Borrowings 34,714 -- 34,714 --
Gold loan repayments (3,958) (2,463) (8,885) (7,390)
Dividends on preferred stock
of subsidiary -- (2,599) -- (8,010)
Preferred share conversions
and redemptions -- (74,187) -- (74,248)
Common share dividends -- -- (4,895) (4,231)
Common shares issued on acquisition of
Santa Elina, net of issuance costs 85,801 -- 85,801 --
Common share issues -- 73,071 4,745 73,898
116,557 (6,178) 111,480 (19,981)
Investing Activities
Mining properties,
plant and equipment (26,724) (8,990) (75,483) (28,144)
Cost of Santa Elina acquisition (91,069) -- (91,069) --
Short-term investments -- (8,178) -- (8,178)
Long-term investments and other assets (599) (17,329) (7,317) (38,347)
Proceeds on sale of
long-term investments -- 42,500 5,550 44,655
Other 210 458 799 595
(118,182) 8,461 (167,520) (29,419)
Net increase (decrease) in cash 10,765 20,083 (40,804) (12,941)
Cash and cash equivalents,
beginning of period 134,274 168,503 185,843 201,527
Cash and cash equivalents,
end of period $145,039 $188,586 $145,039 $188,586
ECHO BAY MINES
Mine Operating Data
Three months Nine months
ended Sept. 30 ended Sept. 30
U.S. dollars, except 1996 1995 1996 1995
where indicated
McCoy/Cove Mine (100% owned)
Gold produced (ounces):
Milled 66,256 77,724 155,397 205,258
Heap leached 19,498 14,278 48,821 46,485
Total gold 85,754 92,002 204,218 251,743
Silver produced (ounces):
Milled 1,965,862 3,195,711 4,533,767 8,763,326
Heap leached 127,125 209,287 383,439 701,815
Total silver 2,092,987 3,404,998 4,917,206 9,465,141
Ore and waste mined (tons) 16,105,592 15,302,074 48,817,998 48,208,101
Mining cost/ton of
ore and waste $0.70 $0.67 $0.70 $0.66
Milling cost/ton of ore $9.60 $11.57 $9.76 $11.24
Heap leaching cost/ton of ore $1.35 $2.38 $1.64 $2.37
Production cost per ounce
of gold produced: (1)
Direct mining expense $238 $176 $291 $196
Deferred stripping cost 6 28 20 21
Inventory movement and other (5) (4) (8) (2)
Cash operating cost 239 200 263 215
Royalties 5 6 5 6
Production taxes 0 8 3 9
Total cash cost 244 214 271 230
Depreciation 58 42 72 49
Amortization 46 45 46 46
Reclamation 10 5 8 5
Total production cost $358 $306 $397 $330
Average gold-to-silver price 76.0:1 71.9:1 74.2:1 74.0:1
Milled:
Ore processed (tons/day) 10,008 7,117 8,756 7,183
Gold grade (ounce/ton) 0.080 0.137 0.097 0.123
Silver grade (ounce/ton) 3.30 6.28 3.41 5.61
Gold recovery rate (%) 80.4 86.1 80.9 84.2
Silver recovery rate (%) 73.7 75.9 73.5 78.5
Heap leached:
Ore processed (tons/day) 22,393 11,070 16,570 12,019
Gold grade (ounce/ton) 0.015 0.016 0.019 0.021
Silver grade (ounce/ton) 0.23 0.52 0.30 0.65
Recovery rates (3)
Round Mountain Mine (50% owned)
Gold produced (ounces):
Reusable heap leach
pad (50%) 32,251 22,132 90,643 71,193
Dedicated heap leach
pad (50%) 24,681 15,938 61,365 50,700
Other (50%) 2,483 3,166 4,740 5,560
Total (50%) 59,415 41,236 156,748 127,453
ECHO BAY MINES
Mine Operating Data
(continued)
Three months Nine months
ended Sept. 30 ended Sept. 30
U.S. dollars, except 1996 1995 1996 1995
where indicated
Round Mountain Mine (continued)
Ore and waste
mined (tons) (100%) 12,119,000 15,289,792 40,868,226 44,732,149
Mining cost/ton of ore and waste $0.79 $0.67 $0.71 $0.60
Heap leaching cost/ton of ore $0.81 $0.61 $0.79 $0.65
Production cost per ounce of
gold produced: (1)
Direct mining expense $208 $246 $224 $216
Deferred stripping cost 15 42 0 23
Inventory movement and other 5 10 9 2
Cash operating cost 228 194 215 191
Royalties 37 33 32 30
Production taxes 3 5 4 5
Total cash cost 268 232 251 226
Depreciation 47 67 50 63
Amortization 18 20 18 20
Reclamation 5 5 5 5
Total production cost $338 $324 $324 $314
Reusable heap leach pad:
Ore processed
(tons/day) (100%) 27,224 23,187 27,823 21,539
Grade (ounce/ton) 0.032 0.034 0.036 0.033
Recovery rate (%) 72.5 66.9 68.1 72.9
Dedicated heap leach pad:
Ore processed
(tons/day) (100%) 107,544 74,148 92,987 62,380
Grade (ounce/ton) 0.010 0.013 0.011 0.013
Recovery rate (%)(3)
Lupin Mine (100% owned)
Gold produced (ounces) 41,295 45,133 129,853 118,017
Tons of ore mined and milled 192,449 182,940 592,836 502,517
Mining cost/ton of ore
(Canadian dollars) C$47.76 C$46.26 C$42.90 C$47.08
Milling cost/ton of ore
(Canadian dollars) C$13.28 C$12.61 C$12.35 C$12.77
Production cost per ounce
of gold produced: (1)
Direct mining expense
(Canadian dollars) C$408 C$392 C$396 C$441
Deferred mine development
cost (Canadian dollars) 13 (16) (5) (26)
Inventory movement and other
(Canadian dollars) 3 3 1 5
Cash operating cost
(Canadian dollars) C$424 C$379 C$392 C$420
Cash operating cost
(U.S. dollars) $310 $280 $287 $305
Royalties -- -- -- --
Production taxes -- -- -- --
Total cash cost 310 280 287 305
Depreciation 71 65 68 74
Amortization 18 20 18 20
Reclamation 8 7 8 7
Total production cost $407 $372 $381 $406
Milled:
Ore processed (tons/day) 2,115 2,010 2,172 1,841
Total tons milled 192,449 182,940 592,836 502,517
Grade (ounce/ton) 0.231 0.267 0.237 0.254
Recovery rate (%) 92.9 92.5 92.5 92.5
ECHO BAY MINES
Mine Operating Data
(continued)
Three months Nine months
ended Sept. 30 ended Sept. 30
U.S. dollars, except where indicated 1996 1995 1996 1995
Kettle River Mine (100% owned)
Gold produced (ounces) 31,579 26,748 94,071 73,839
Tons of ore mined and milled 148,406 149,171 430,256 414,432
Mining cost/ton of ore $19.24 $21.20 $21.25 $23.41
Milling cost/ton of ore $12.93 $12.34 $12.48 $12.74
Production cost per ounce
of gold produced:(1)
Direct mining expense $194 $235 $192 $250
Deferred mine development cost -- -- -- --
Inventory movement and other 7 (18) 4 7
Cash operating cost 201 217 196 243
Royalties 8 9 9 9
Production taxes 2 2 2 2
Total cash cost 211 228 207 254
Depreciation 58 70 59 76
Amortization 45 45 45 45
Reclamation 8 7 8 7
Total production cost $322 $350 $319 $382
Milled:
Ore processed (tons/day) 1,631 1,639 1,576 1,518
Total tons milled 148,406 149,171 430,256 414,432
Grade (ounce/ton) 0.244 0.205 0.253 0.204
Recovery rate (%) 87.1 87.7 86.3 87.5
(1) Effective January 1, 1996, Echo Bay adopted the new Gold Production
Cost Standard developed by the Gold Institute as a means of facilitating
meaningful comparisons among companies through uniform presentation of all
cost data industry-wide. "Cash production costs" reported by Echo Bay in
prior periods have been converted into "cash operating costs" in accordance
with the new standard. In Echo Bay's case, there is no material difference
between the two.
(2) To convert costs per ounce of gold into comparable costs per ounce of
co-product silver, divide by the period's average gold-to-silver price ratio.
(3) Recovery rates on dedicated heap leach pads can only be estimated, as
actual recoveries will not be known until leaching is complete. At the
McCoy/Cove mine, the gold recovery rate is estimated at 68% for crushed ore
and 48% for uncrushed, run-of-mine ore, while the silver recovery rate is
estimated at 30% for crushed ore and 10% for uncrushed, run-of-mine ore. At
the Round Mountain mine, the gold recovery rate on the dedicated heap leach
pad is estimated at 50%.
/CONTACT: Jill Paukert, media, 303-714-8825, or Ted Sheldon, investors,
303-714-8813, both of Echo Bay Mines/
(ECO)
SOURCE Echo Bay Mines Ltd.
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CONTACT:
Media: Jill Paukert, 303-714-8825; or
Investor: Ted Sheldon, 303-714-8813
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